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Andy Sack started off his Breakfast Buzz presentation by stating that he believes in direct, honest communication.  He asked the audience to vote on a lecture type presentation or a Q&A session.  A significant number of people wanted a Q&A session, so he moved through his slide deck quickly and devoted the rest of his time to answering questions.

Andy offered the Cliff Note version of his presentation:
1. Ideas are cheap.
2. Creating a cash flowing business is a process.  It’s expensive in terms of time, money and passion.  It’s hard.
3. Things to remember.
    1. KISS
    2. Cash flow is king.
    3. Customer acquisition is queen.
    4. Listen to your gut.

Andy’s favorite slide in his deck is the one that said “cash is more important than your mother.”
Since 2008, Andy has been swimming in the world of Founder’s Co-op, Lighter Capital and Tech Stars. 

What’s the process of moving from an idea to a business?
1. Idea formation.  The ideas that keep coming back to you are the ones to work on.  You have to foster the idea into an opportunity.
2. Business Kernel.
    -Validation, refinement and testing.
    -Initial real world launch
3. Revenue generating business opportunity.
4. Cash flow positive business.
In a good scenario, 1 through 4 takes a year.  Sometimes it can take less time and sometimes it can take a whole lot longer.

Popping from Kernel to Opportunity
Idea
+ target market/customer
+ product offering
+ deal structure/pricing
+ customer acquisition plan
+ committed entrepreneur
= business opportunity

Some advice Andy offered is to put your business on 2 pieces of paper:  an Excel spreadsheet and one with the sequence of Popping from Kernel to Opportunity.

For the Excel spreadsheet, put columns across the...
see more Andy Sack started off his Breakfast Buzz presentation by stating that he believes in direct, honest communication.  He asked the audience to vote on a lecture type presentation or a Q&A session.  A significant number of people wanted a Q&A session, so he moved through his slide deck quickly and devoted the rest of his time to answering questions.

Andy offered the Cliff Note version of his presentation:
1. Ideas are cheap.
2. Creating a cash flowing business is a process.  It’s expensive in terms of time, money and passion.  It’s hard.
3. Things to remember.
    1. KISS
    2. Cash flow is king.
    3. Customer acquisition is queen.
    4. Listen to your gut.

Andy’s favorite slide in his deck is the one that said “cash is more important than your mother.”
Since 2008, Andy has been swimming in the world of Founder’s Co-op, Lighter Capital and Tech Stars. 

What’s the process of moving from an idea to a business?
1. Idea formation.  The ideas that keep coming back to you are the ones to work on.  You have to foster the idea into an opportunity.
2. Business Kernel.
    -Validation, refinement and testing.
    -Initial real world launch
3. Revenue generating business opportunity.
4. Cash flow positive business.
In a good scenario, 1 through 4 takes a year.  Sometimes it can take less time and sometimes it can take a whole lot longer.

Popping from Kernel to Opportunity
Idea
+ target market/customer
+ product offering
+ deal structure/pricing
+ customer acquisition plan
+ committed entrepreneur
= business opportunity

Some advice Andy offered is to put your business on 2 pieces of paper:  an Excel spreadsheet and one with the sequence of Popping from Kernel to Opportunity.

For the Excel spreadsheet, put columns across the top for 1) quantifying the value of the market, 2) how to create value and 3) how to extract money.  Many people forget the part about making money.  According to Andy, it’s better to be really good at extracting value than it is to be good at creating value.  Master Card and Visa are examples of businesses that are really good at extracting value.

Going down the left side of the Excel spreadsheet, break down the target markets into segments.  For example, hard core skiers, average skiers and beginner skiers.  Creating value and extracting value from each segment is different.

Andy’s Concrete Tips
1. Put your business on 2 sheets of paper.
2. Read “Lean Startup” by Eric Ries.
3. Watch Steve Blank videos online.
4. Talk to 30 customers and ask questions about their activities.
5. Focus on market problems that matter.
Andy spent the rest of his presentation answering questions.
Q: Should you do customer validation?
A: It’s hard to get people to do it and to do it well.  The process is helpful, even if it’s not done well.  Talk to 50 target customers.  By the time you are done talking to those customers, hopefully, your idea will evolve.  Understand the nuances of problem solving for those customers.
Q: Why did Judy’s Book fail?
A: The business was early in the market and he didn’t persevere.  When a business is early in the market, there is a fear of failure.  There’s no difference between early in the market and wrong.  Facebook and iPhone didn’t exist then.  He chose to sell off and return the money to the investors.  Yelp kept going.  It’s the big fish that got away.  He screwed up.  The people at Yelp were having the same anxiety he was.
Q: What do you do with the information that you get from the 30 customers you talk to?
A: Share the information with other people.  Learn from it, focus on the problems you are trying to solve and prioritize.  Laser in on the problem to solve and you will create value.
Andy quoted someone as saying that he never met a business that did no business.  Andy sees the fear not as fear of failing, but as fear of ending up with a break-even business that doesn’t grow.  You want a business to grow, so that you can spend more time playing golf or doing whatever your hobby is, and not all of your time working to break even.
Q: What about NDA’s?
A: NDAs are worthless.  Next question.
Q: Question about the amount of information needed to make decisions.
A: Life is a mix of rational and emotional.  Trust your gut.  Most decisions are made based on insufficient data.  A lot of being an entrepreneur is managing anxiety and uncertainty.
Q: Do we need a business plan?
A: Andy wants to see the 2 pages he described – the Excel spreadsheet and the Popping from Kernel to Opportunity sequence.  He can learn most of what he needs to know in a 5 to 10 minute conversation.  The speed of change is so rapid, particularly in tech businesses, that doing a business plan is a waste of time because by the time it’s done, things are different.
Q: At the angel stage, do we need a team?
A: You need a team.  Most businesses are built by a great team.  You need two things, a great team and a great market.
Q: How do you get a great team?
A: Look at the teams that you worked on that were good and try to figure out what made it good.  Even really good teams have really hard times.  Know who you are getting into business with, trust them and make sure that what you are good at is different from what other team members are good at.
Q: When do you know when to stop and move on?
A: How do you know when a relationship is over?  Trust your gut.
Q: What are the early stage numbers to look at?
A: In the early stage, look at what problems customers are having, how you are going to solve those problems and how to make money doing it.
Q: How do early stage entrepreneurs make it to beta without cash?
A:  People get scrappy.  Andy used as an example some entrepreneurs who repackaged Cheerios and sold them as Obama-Os.
Q: What problem does entertainment solve?
A: Those businesses solve emotional problems.  Do I look good?  How should I spend my entertainment dollars?
Q: What about businesses where users and customers are different?
A: That’s hard.  You have to put the equation on the board and figure out how to make money.  Andy thinks Steve Blank is awesome and that viewing his videos is a good way to advance business thinking.
Q: Why is “lean startup” hard to put into practice?
A: Once you figure out a customer problem to solve, understanding the problem and asking questions around it is pretty complex.  For example, why do people paint their homes?  There are a lot of emotional and financial reasons, such as wanting a certain look and preserving the value of the home.  You need to compile a lot a data by asking a lot of questions of a lot of people.  Entrepreneurs don’t like to get that detailed.

Andy ended his presentation by asking what he could have done to make his presentation better.  He asked for direct, honest communication.  One person thought that he should have used more examples.  Another person thought he should have provided more information on where to find resources.

Thanks to Andy for an informative, fast-paced and interactive presentation.


8 months ago